Chinese solar companies are struggling too

Canadian Solar Inc. CSIQ, which is based in China with a business address in Canada, saw its shares fall 10% on Monday after it said it expects third-quarter gross margin of 2% to 5% — well below its earlier estimate of 9% to 12%, because of weaker selling prices.

The announcement shows that even China-based solar panel makers are struggling, along with U.S. firms such as First Solar FSLR, which has been trading at some of its lowest levels since 2007.

Canadian Solar said it’ll ship just as many panels as it planned in the third quarter — it’s just not making as much money on each one. So while customers seem to want the solar panels, the pricing in the business just isn’t holding up.

One encouraging sign from Canadian Solar that’s mostly being overlooked by investors at the moment: the company said it saw strength in customer demand return at the end of the third quarter. While it may not be good enough to reverse its current slide, the comment holds some promise of healthier activity in the future for Canadian Solar. But at the moment, the tunnel is still pretty dark.

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